Andy Burnham has declined to rule out tax increases in the upcoming autumn Budget, acknowledging the UK is in a "challenging position" on public finances.
The warning comes as official figures showed government borrowing rose to £1.8 billion in July, 68.7% higher than a year earlier, while inflation surged to a four-month high of 2.9% amid fallout from the Iran war. Chancellor John Healey faces pressure to raise taxes or cut spending as public finances leave no room for extra borrowing.
Separately, Housing Secretary Angela Rayner said the government is "tilting" towards council and social housebuilding with £10 billion in funding for more than 70,000 homes. London Mayor Sadiq Khan will receive £6 billion to spend on housing, with further allocations directed to Greater Manchester, the West Midlands and other regions. Britain also became the first ally granted access to Ukraine's battlefield data to help train military AI systems.